Standard Chartered PLC (SCDRF)

Standard Chartered (OTC:SCDRF, OTCPK:SCBFF) has agreed to sell its Hong Kong-based consumer finance business to a consortium that includes Pepper Australia Pty and York Capital Management, in a deal estimated between $600M-$700M, Reuters reports.

The sale of the unit, called PrimeCredit, comes as the bank tries to address share price underperformance and difficulties in markets such as South Korea.

Standard Chartered (OTC:SCDRF, OTCPK:SCBFF) has agreed to another three years of scrutiny by the DOJ and the Manhattan district attorney for compliance with government sanctions against several countries, including Iran. Its original deferred prosecution agreement was due to expire today.

Standard Chartered paid U.S. authorities $667M in 2012 over the violations and was fined another $300M in August over its failure to flag high risk transactions.

Standard Chartered (OTC:SCDRF, OTCPK:SCBFF) plans to cut 80-100 retail branches in 2015 as part of its plan to save $400M a year to improve profitability, according to slides released at an investor roadshow.

The bank is holding a three-day roadshow to convince analysts and investors it can revive the bank's fortunes after three profit warnings this year and several regulatory issues.

The DOJ, Manhattan District Attorney Cyrus Vance Jr. and Benjamin Lawsky, superintendent of New York’s Department of Financial Services, are all reopening their original investigations into Standard Chartered (OTC:SCDRF, OTCPK:SCBFF) to determine whether it intentionally withheld evidence of Iran sanctions violations from regulators before its 2012 settlement.

Standard Chartered agreed to pay $340M to the NY Department of Financial Services in August 2012 for its role in hiding the identity of Iranian clients in billions of dollars worth of wire transfers.

Standard Chartered (OTC:SCDRF, OTCPK:SCBFF) is nearing a $200M-$300M settlement with the New York Department of Financial Services over its alleged failure to flag high risk transactions.

The penalty would be the second Standard Chartered has paid to the banking regulator in the last two years. In 2012, the bank agreed to pay a $340M settlement over allegations that it erased identifying information from transactions linked to Iran in order to avoid U.S. detection.

Standard Chartered (SCDRF) warned that the operating profit at its consumer banking unit would suffer a "double-digit drop" this year, the first fall in a decade.

The bank has fared better than European peers through the financial crisis due to its high exposure to Asia; that exposure is now coming back to bite it, with the bank blaming eroding profitability on South Korea. That unit already wrote down $1B in 1H due to a dispute with regulators and a reduction in its branch network and now sees an operating loss of $200M on the year. Bernstein blew the whistle on the phenomenon back in Aug.

"It is the very beginning of the downcycle in emerging markets for HSBC (HBC) and StanChart (SCDRF.OB), and the opposite for the rest of the UK banks," an analyst at Bernstein tells FT.

The two banks — whose post-crisis pre-tax profits were a combined $66B through 2011 — may now fall behind the curve as their exposure to Asia becomes a drag amid tighter credit conditions and an acceleration in sour debt.

Rising rates in the U.S. and other Western economies may reduce the incentive for investors to hunt for yield, exacerbating slowdowns in emerging markets.

HSBC may be better hedged given its U.S. businesses. As for StanChart, here's Bernstein's Chirantan Barua: "When you have naked exposure, you get the best of times and the worst of times."

U.K. Finance Minister George Osborne will reportedly express his support today for the overwhelming majority of recommendations of a parliamentary panel to raise standards at the country's banks. The proposals include making it a crime to manage a bank recklessly and easier to claw back bonuses, although Osborne won't back a plan for tighter limits on leverage ratios.

Muddy Waters is short Standard Chartered (SCBFF.PK, SCDRF.OB), saying the market "misunderstands the amount of risk that's presently in the book." MW's Carson Block cites Standard Chartered's $1B load to Samin Tan, chairman of Bumi (PBMRF.PK), the coal company at the center of a dispute, and a $30M loan to Far Eastern Energy (FEEC.OB), with a market cap of $42M, as red flags. He says shorting Standard Chartered is "a very nice way to play the eventuality of the China unwind."

Stanley Black & Decker (SWK+1.1%) completes its $850M acquisition of Hong Kong based Infastech from CVC and Standard Chartered. Infastech is one of the largest Asia-based manufacturers of mechanical fasteners and the deal will help SWK increase its revenues from emerging markets to 16% of total sales. SWK also expects the acquisition to add $0.20 to its adjusted EPS in 2013 and $0.40 in 2015. (PR)

Standard Chartered (SCBFF.PK) expects to pay $330M in fines to settle accusations that its dealings with Iranian customers breached U.S. sanctions. The penalty, which the U.K. bank is negotiating with multiple authorities, would add to the $340M that StanChart has agreed to pay to the New York Department of Financial Services. Meanwhile, the company forecast FY revenue and pretax profit growth of under 10%. (PR)